Anger as £700,000 of £3m British aid to Malawi spent on US firms

Sunday 28 August 2005 20.58 EDT
First published on Sunday 28 August 2005 20.58 EDT

The government was under attack from development charities last night for allegedly wasting hundreds of thousands of pounds on aid to Malawi by paying it to American consultancies.

Two charities, ActionAid and the World Development Movement, accused the Department for International Development (DfID) of paying out "phantom aid" to the poor, after it was revealed that more than £700,000 of a £3m project was spent on hotel bills and meals for US workers.

According to an investigation by BBC Radio Five Live, DfID donated £3m to Malawi relief projects. Of that cash, £586,423 was spent on hotels for a US consultancy agency, the National Democratic Institute. Another £126,062 was allegedly spent on meals.

The BBC inquiry claims that one project funded by the DfID flew in pens and notebooks from Washington, instead of buying them locally.

Patrick Watt, of the charity ActionAid, told the programme: "This is another example of aid money not getting down to people who most urgently need to benefit from it. It's phantom aid, when what Malawi needs is real aid."

Peter Hardstaff, head of policy of the World Development Movement, said: "The government is spending money on consultants that do not benefit the country.

"This seems to have arisen because the DfID is working together with the United Sates on this project. Under US aid rules, all money given by the United States has to be spent by US firms."

The project involved spending money on setting up parliamentary committees to scrutinise the work of the Malawi government - most of the money was spent on sending in US experts on democracy and entertaining and holding meetings with Malawian MPs in hotels.

Another US group, called World Learning, was hired to distribute £4m of British money in Malawi, but the project called the Tikambirane Programme was cancelled after six months, at a cost of £300,000.

A spokesman for the DfID yesterday defended its work in Malawi, one of the world's poorest countries, but did admit: "The costs of the National Democratic Institute project were high, and we have continued to try and reduce them. For poverty to be reduced in Malawi, it needs an effective parliament and strong civil society organisations. This is why DfID has provided funding to parliament, civil society and election processes.

"We recognise that there have been some problems with the Tikambirane project. Where there have been problems, we have acted quickly to resolve them. That's going to help around 3 million people to be fed," he said.

The international development secretary, Hilary Benn MP, said: "There clearly have been some problems with the projects, and where there are lessons to be learnt, I'm very determined that we do that.

"A decade ago, 10% of DfID's budget was being spent on consultants, that's now down to 5%, so that is being reduced.

"The other concern with the National Democratic Institute was that they were using a lot of expats. We did ask them to use more Malawian staff, and they're in the process of doing that."

He defended the work of his department, adding that since Malawi's drought this year the government had committed to investing £10m in aid.

World Learning said the whole venture was "unfortunate for all of us but most of all for the Malawian organisations which should have been helped as a result."

The disclosures are likely to lead to an investigation by the National Audit Office, parliament's financial watchdog. Auditors have decided that the DfID's use of consultants should be examined to see whether it is value for money.